Cheap money fuels consolidation in French telecoms market
via Flickr © Tax Credits (CC BY 2.0)
The French government wanted consolidation - it’s getting it, but perhaps not quite in the form it expected. Billionaire Patrick Drahi, who controls the Altice holding company and its subsidiary Numericable-SFR, wants to buy out Vivendi’s 20 per cent stake in the company which it holds as a result of selling SFR to Drahi.
Drahi wants to have full control over Numericable-SFR to stay on top of things as and when the next round of consolidation starts up in France. To that end Drahi has offered Vivendi €3.9 billion or €40 per share, above the estimated €33.3 per share it paid for SFR last November.
Analysts say the move could enable Drahi to move on its now smallest rival, Bouygues Telecom, armed with lots of borrowed money. The reality of the extended European recession and its low interest rates is that it creates opportunities for companies prepared to ‘leverage’ themselves and strike while the iron is hot to build scale in the telecoms market.
So far the French market, despite the political ‘noises off’, hasn’t consolidated horizontally (reducing the actual number of mobile operators) but, as in the UK, appears to be vertically consolidating with fixed/mobile groups emerging.
That might change if Drahi gets his way and sets his sights on Bouygues.